The agency is setting up rules for use of Dish's satellite spectrum for LTE

Satellite service provider Dish Network has slammed the FCC's plan to let it use some of its spectrum for LTE, saying the proposal is so restrictive it could delay a network buildout for years.

The U.S. Federal Communications Commission said late Tuesday that Chairman Julius Genachowski had shared with other commissioners a plan to make some of Dish's current satellite spectrum available for use on a land-based cellular network. Dish has been seeking that ability for months amid a hot market for cellular data capacity. But the proposal is also designed to set aside another band right next to Dish's spectrum to be auctioned for mobile data use, so Dish's network would have power restrictions to prevent interference.

"While the FCC would grant full terrestrial rights, its proposal to lower our power and emissions levels could cripple our ability to enter the business," wrote R. Stanton Dodge, Dish's executive vice president and general counsel, in a statement released Tuesday. Dish said its statement was based on reports about the proposal, which has not been made public.

Dish acquired licenses to 40MHz of spectrum by buying two satellite companies, TerreStar and DBSD North America. It wants that spectrum, currently designated for satellite use, to be opened up for cellular service. The company says its plan avoids the interference problems that hobbled a similar proposal by LightSquared earlier this year because its frequencies are far enough from the ones used by GPS (Global Positioning System).

However, a law passed earlier this year directed the FCC to auction off an adjacent block, called the H Block, to help fund the planned FirstNet public safety network. If it does auction that spectrum, Sprint Nextel is expected to bid for it. The H Block is made up of two 5MHz slivers of spectrum but could be combined with Sprint's current LTE spectrum and boost the capacity of its network.

To make sure the two bands can coexist, the FCC is expected to place power limits on the bottom part of Dish's LTE spectrum. The company said those limits would prevent it from fully using the spectrum. "Dish expects new approvals could add years to a process that has already lasted 20 months since it acquired two bankrupt companies in an effort to bring this spectrum to the market," Dish's Dodge wrote. The change would kick off lengthy processes at both the FCC and the 3GPP (Third-Generation Partnership Project), which defines standards for LTE, according to Dodge.

Dish hopes to head off the FCC's proposal as it moves toward final approval. "The good news is that this proposed order is not final and we urge Chairman Genachowski and the Commissioners to recognize that the Dish plan delivers on the greatest public interest," Dodge wrote.

Dish is still likely to win big, according to Tim Farrar, an analyst at TMF Associates. The restrictions are modest and affect only the uplink portion of Dish's spectrum, which client devices use to send typically small amounts of data up to the mobile network, he said. The company could turn around and sell the spectrum to an established mobile operator for far more than it paid for TerreStar and DBSD, he said.

"Even with these modest restrictions ... it's still going to be worth quite a lot more than $3 billion," Farrar said.